The Hows and Whys of Gold Price Manipulation

During discussion in the economic threads one thing that always seems to come up is gold and whether it has any real value during a crisis or SHTF scenario. People will point to the fact that gold is trading significantly down from it's previous $1900/oz price or that "gold cannot be eaten" or even that golds main value is ornamental or used for electronics. All partially true, to a point and yet if we look at exactly who is manipulating the gold markets and more importantly why then we get a much clearer view of what is really happening in the world of global financial domination and control.

The short answer is the Federal Reserve through the central banks is furiously manipulating the price of gold to support the US dollar due to it's increasing weakness caused by QE. I won't go into details, read the article if you are interested. It's fairly long but easy to understand. I'll leave you with a couple paragraphs from the article that may provide some enlightenment as to the why.

The Hows and Whys of Gold Price Manipulation

Default on delivery of purchased gold would terminate the Federal Reserve’s ability to manipulate the gold price. The entire world would realize that the demand for gold greatly exceeds the supply, and the price of gold would explode upwards. The Federal Reserve would lose control and would have to abandon Quantitative Easing. Otherwise, the exchange value of the US dollar would collapse, bringing to an end US financial hegemony over the world.

Quantitative Easing is a threat to the dollar’s exchange value. The Federal Reserve, fearful that the falling value of the dollar in terms of gold would spread into the currency markets and depreciate the dollar, decided to employ more extreme methods of gold price manipulation. When gold hit $1,900, the Federal Reserve panicked.

Having created more paper gold claims than there is gold to satisfy, the Fed has used its dependent bullion banks to loot the gold exchange traded funds (ETFs) of gold in order to avoid default on Asian deliveries. Default would collapse the fractional bullion system that allows the Fed to drive down the gold price and protect the dollar from QE.

There are questions about who actually has the gold.

Germany Has Recovered A Paltry 5 Tons Of Gold From The NY Fed After One Year

"Konnten die Amerikaner nicht mehr liefern, weil sie die bei der Federal Reserve of New York eingelagerten gut 1500 Tonnen längst verscherbelt haben?"

Or, in English, did the US sell Germany's gold? Maybe. The official explanation was as follows: "The Bundesbank explained [the low amount of US gold] by saying that the transports from Paris are simpler and therefore were able to start quickly." Additionally, the Bundesbank had the "support" of the BIS "which has organized more gold shifts already for other central banks and has appropriate experience - only after months of preparation and safety could transports start with truck and plane." That would be the same BIS that in 2011 lent out a record 632 tons of gold...

reply to post by xuenchen

There are questions about who actually has the gold.

Oh yeah, there certainly is. And a bunch of it's heading to China and it's coming from somewhere as the original article so clearly points out. Asia is going to scoop up gold until the gold vaults are empty.

The website, which cites an analysis by Jeffrey Nichols of American Precious Metals Advisors, reports that the Chinese central bank is about to announce its gold holdings have nearly tripled from 1054 tons to 2710 tons. link

Who is one to believe? Coast to Coast just had a guy (Harry dent?) talking about China's financial bubble along with the rest of the worlds. He said gold would go down to somewhere around 650 to 700 an ounce by 2019.. He said the loss on homes would hit again and it would not be a good time to be buying property. He was a firm believer in Bourbon and shotgun shells having more value. Interesting stuff with the 1/21/2014 broadcast...

reply to post by 727Sky

He said gold would go down to somewhere around 650 to 700 an ounce by 2019

It is difficult to make heads or tails of I admit. I think if people try to view the overall picture with global perspective we can sometimes find the truth. Here's a few.

1. The Fed is printing about a trillion dollars a year out of thin air.
2. This QE money expansion caused the dollar to drop verses gold (went to $1900/oz.)
3. Fed sponsored short selling and raiding via central banks caused the price drop for gold.
4. Asia is buying gold hand over fist, the west is selling at the same rate.
5. Currency backed by gold reserves is a threat to fiat money (dollars and euro, etc.)

I think things could be wild in the gold markets in the coming months or years but in the end the golden rule will most likely win. He who has the gold makes the rules.

Bassago
reply to post by 727Sky

 

He said gold would go down to somewhere around 650 to 700 an ounce by 2019

It is difficult to make heads or tails of I admit. I think if people try to view the overall picture with global perspective we can sometimes find the truth. Here's a few.

1. The Fed is printing about a trillion dollars a year out of thin air.
2. This QE money expansion caused the dollar to drop verses gold (went to $1900/oz.)
3. Fed sponsored short selling and raiding via central banks caused the price drop for gold.
4. Asia is buying gold hand over fist, the west is selling at the same rate.
5. Currency backed by gold reserves is a threat to fiat money (dollars and euro, etc.)

I think things could be wild in the gold markets in the coming months or years but in the end the golden rule will most likely win. He who has the gold makes the rules.

You and I are of an age where all of that makes perfect sense to us.. India is the biggest buyer of gold with China #2// Harry Dent absolutely says China will crash for in the next two years and they will start selling gold which will kill the market... He was also actually big on the dollar which I found strange but he seemed to have his forecast facts and history on his side? Anyway catch the broadcast if you can for a different view on the next few years..

I am just a screen name with a stupid cat jumping without a parachute and I promise I don't have a crystal ball... I am retired and do not want to lose my comfortable nest egg so... I do not know what to do except spread what little I have between the dollar and the Thai baht... Back in the late 90s the dollar to baht went to almost 50 baht to the dollar and then back down around 28 about 6 months ago.. With the political unrest in Thailand it is now around 32.84 baht to the dollar...

If the Baht goes back to around 50 I am highly tempted to pull everything out of my retirement fund and exchange it to Baht.. Will have to pay 35% tax to uncle sugar but will probably make it up on the back end ? Also even though I would make more in interest on a savings account in a Thai bank the same Uncle sugar wants me to pay taxes on it... So like I said I really do not know what to do ? We do have some gold which is Thai gold (24 carrot) but not nearly enough to live on in my golden gray years...especially if the value goes to $650 an ounce

reply to post by 727Sky


I can see the point about the Chinese bubble breaking and them dumping gold. That would really hammer the price downwards. On the other hand at the rate the Fed is scooping up gold to fill physical orders from Asia it may be them who hits the wall first. Guess we'll have to wait and see.

Currency speculation can be lucrative from what I've seen but I don't know a great deal about it. A friend of mine did invest thousands of dollars in Iraqi currency after the war thinking he'd make a killing on it but I don't think he did.

Just wanted to be clear here. This is not a "invest in gold" or you're doomed issue. This is specifically about the manipulations being done in the market by the Fed and central banks as they desperately try to prop up their fiat money system.

As noted above, gold could crater if China starts dumping but that has little to do with the current manipulation taking place right now by the Federal Reserves and it's little helpers as they try to save the dollar.

reply to post by Bassago


I don't know how you find the time to keep making all these great threads, but keep it up!

I try to explain how gold prices are being manipulated, but most people don't understand or don't care. When someone tells me that gold is "just a shiny metal" I quit wasting my breath. A central question in my Grand Unified Conspiracy Theory is, "Where is the gold?"

reply to post by VictorVonDoom


Thank you and I'll try.

A central question in my Grand Unified Conspiracy Theory is, "Where is the gold?"

That is a great question and central to much of what's happening in the great fiat money marketplace. I think we can look at that and give the following answers:

Fort Knox - nope
Federal Reserve Bullion vaults - possibly though impossible to say without a real audit
Central Banks vaults - getting pretty empty
Going to Germany - ha ha sure in seven years... maybe
Bank of England - maybe some not counting that 1300 tons that just disappeared
China, India, Russia - Definately a lot heading there.

Got this in an email from jim sinclair

Former Assistant Treasury Secretary Paul Craig Roberts is making some bold new claims about the Federal Reserve and its official government gold holdings. Dr. Roberts contends, “They don’t have any more gold. That’s why they can only give Germany 5 tons of the 1,500 tons it’s holding. In fact, when Germany asked for this delivery last year, the Fed said no. But it said we will give you back 300 tons . . . . So, they said we will give you back 20% of what you trusted us to keep for you over the next seven years, but they are not even able to do that.” Dr. Roberts goes on to say, “The stocks of gold at the Bank of England seem to be disappearing. The stocks of many of the gold trusts, such as GLD, are being looted . . . all of this gold is disappearing into Asian markets. The entire West is being drained of gold.” According to Dr. Roberts, this is an inflection point for the gold market. Dr. Roberts says, “The reason is: the ability to supply large amounts of gold to the bullion dealers to sell has diminished with the supply of gold and silver. What the Fed did was turn to massive ‘naked shorts’ of gold futures contracts. They don’t have the real gold . . . so they come in and dump contracts, say in a period of 6 minutes, that are three times the amount of gold COMEX has to make delivery. . . . So, it drives down the price of gold. That’s how they got the price down from $1,900 to $1,250.”

read the rest here

I have been a 'gold bug' for many years and it has been good for me despite the recent downturn . Sinclair issued warnings before the housing collapse. He has, for the last two years, been saying you need to "GOTS" Get Out Of The System".
Pay off your debts if you can...including your house
Get out of the banking system
Put stocks you want to hold into Direct deposit accounts
Have gold, preferably, or cash on hand
among other things.

The IMF issued a warning recently to mostly western economies.

The problem is that we have at least 2 or 3 generations of people now who can't even comprehend the idea that gold is a trade currency (not a commodity) that's been successfully used for centuries.

And when the petro dollar tanks, gold will be used in the interim until a new reserve currency steps into the picture. Either a new international fiat currency will be created, or the world will go back to the gold standard. But in the meantime, gold is the only agreeable international currency among nations as something of value to import goods.

This is why Asian countries are buying it up like it's going out of style... they understand what's coming around the corner. And you better believe that TPTB are also buying it up (albeit quietly behind the scenes) and stashing it in their "mattresses".

Gold and silver will always be the fall back currencies to keep the global markets flowing.

It's the only form of money that doesn't crash and burn. These past few generations think that gold is unstable due to all the price manipulation that's been going on non-stop. But nothing can be further from the truth.

From the article posted above "The Hows and Whys of Gold Price Manipulation"
"Default on delivery of purchased gold would terminate the Federal Reserve’s ability to manipulate the gold price. The entire world would realize that the demand for gold greatly exceeds the supply, and the price of gold would explode upwards."

There is a missing step here, when the world realizes there is not enough physical gold to meet demand the price will plummet as fund traders and paper gold holders sell their claims on gold. Physical gold instantly becomes unavailable in large quantities at the new low price, unavailable at the pre-crash price and even unavailable at former highs even with premium on top. A new market for global trade in physical only gold will start up and then and only then 'the price of gold would explode upwards.' If you plan on saving some physical gold get it before this entire world realization even starts and the paper only price crashes.

reply to post by Bassago



I was watching Bloomberg TV a few days ago. They said all the gold bars were going to China.

reply to post by Bassago


IMO, China has more than they are saying. They mine gold too, alot of it. And it never leaves either. But then again, China and India have been hoovering gold up at voracious rate. But why and how is that tied to gold manipulation?

For India and it's a hedge the working man and rich use to invest their wealth. It's also used in ceremonial events. Now those events are pretty stable, plus or minus... we aren't trying to get to technical but I'm sure there are some shifts both up and down. Accounting for that, India is still getting down with the get down. Not even capital controls are working as, you guessed it, smuggling is getting gold to whoever wants it. It'll cost you a little or it'll cost you a lot but it'll cost ya. And you have however much gold you want.

For China the dynamic is different. No widespread use of "gold" as India does for ceremonies as one of the covers. So whose buying? The government AND people. Once again it's a hedge the working man and rich use to invest their wealth. Also in China nothing says "I got bread" like solid gold. What we use bling for here.

The government however can be using it back their own CNY just in case something happens to the USD. However, China is so far in the closet that [insert dramatic metaphor]. But that's not sexy so let's sexy it up. This is ATS and "we" think with our tin foil hats on, some say that they are positioning their currency as a world reserve currency to replace the dollar. That ain't gonna happen so why is gold being manipulated.

Well, ZeroHedge found the smoking gun via intermediary and had us all laughing. It's cornered to give the advantage to the USD and EURO against other countries. Not economies. Countries. They wanted to use a reserve note they could "create" but instead opted to the dollar. Once they got oil to be backed by it, good night. Free money from other people selling their own oil. It goes down hill from there.. heh.

Edit: Well nevermind. I see you covered these paragraphs with bulletin points. Brilliant!

reply to post by inthewinterdark

There is a missing step here, when the world realizes there is not enough physical gold to meet demand the price will plummet as fund traders and paper gold holders sell their claims on gold. Physical gold instantly becomes unavailable in large quantities at the new low price, unavailable at the pre-crash price and even unavailable at former highs even with premium on top.

You're right about that and I think at that specific time we are going to see the collapse of global markets as QE is halted. If it's not halted we will see the complete collapse of the dollar vs gold. This is probably the time we will see a world wide depression and true SHTF scenarios around the world, US included.

Obviously a global market collapse isn't something China wants as it will hammer their economy as well. Which probably partially explains their mindset on gold. Massive correction is going to occur sometime, better to have the gold than not regardless of how or when it happens.